Efficiency and Utilization

[Former Member]

In SAP APO, how do you account for efficiency on a resource?  For example, a resource works 24 hours, but they take a 1 hour break and two 15 minute breaks, so the resource is actually running for 22.5 hours which is 93.7% utilization.  During those 22.5 hours the resource is running, it produces 11.25 standard hours of work, which is 50% efficiency.  I see where we can enter a utilization value for the resource, but no where to enter an efficiency value.  So i have two questions:

1.     Does everbody agree that Efficiency and Utilization are two DIFFERENT things

2.     If so, then how does APO manage efficiency, or does APO just assume 100% efficiency and there is no way to manage it?

[RahulHanda · Accepted solution]

HI Jason

Of course both are different but we need to understand that how we need to capture the same and interpret accordingly. In above example you will maintain utilization as 93,7% in resource. This being how much you can utilize resources (though could be done by shifts Etc. but for argument we stick to this).

Now as a thumb rule we know that 22,5 hours will produce 22500pcs just as an example. This would be maintained in routing that is 30mins = 500pcs or let it be per piece accordingly. Now on shop floor what's the efficiency would be determined on the basis of actuals. This actual will be derived from operation confirmation in production/ process order. I started my operation today and ended it tomorrow after 45hrs which means date and time being confirmed for this operation. This will define your efficiency.

i Hope you will agree to above. So APO works on planned efficiency which in other words is stored in routing but compared to actuals from production orders.

if this answers your question follow http://scn.sap.com/community/support/blog/2013/04/03/how-to-close-a-discussion-and-why else raise your concern.

regards

Rahul

[Former Member · Accepted solution]

The way we measure our production rate here is standard hours earned versus actual hours worked.  We dont measure pieces.  As most of our work takes days to complete.  Anyway, i looked in the hard routing in ECC and it appears the efficiency fields have been disabled.  Is there any way to communicate to APO that a workcenter is expected to produce at a lower than 100% efficiency?

[RahulHanda · Accepted solution]

I would suggest you to explain with right example so that we are on common platform for your scenario.

In work center you maintain utilization of that resource but not efficiency. As I mentioned before, efficiency could always fluctuate on the basis of actual's. 

Regards

Rahul

[Former Member · Accepted solution]

Yes, i agree, efficiency does fluctuate.  Here is an example.  Say we have a new employee starting and we plan that they are going to have a 50% efficiency while they are training.  We dont want to change utilization because they will work the same shifts/hours, however, the new employee will only earn 1 standard hour for every 2 actual hours they are running the machine. So if a job has an activity that takes 7 standard hours (according to the hard routing) APO would actually schedule that job to run for 14 hours because of the new employee. 

[RahulHanda · Accepted solution]

I hope you are already maintaining routing data? In normal condition when skilled labor is working then I hope you are maintaining 1 base quantity will take 5 days etc.

If yes then this is what you can try: create another routing for this material for this phase "training" and put 10 days for 1 base quantity (being 50% efficiency).

Then create a production version with validity date as 1~15 for training and 16~n for skilled routing. This way it will consider planned efficiency while planning though actual can still differ as skill improves.

Let me know if you are handling currently in some other way.

Regards

Rahul

[Former Member · Accepted solution]

Yes we maintain routings, however, we maintain ten's of thousands of routings, plus we are engineer to order facility so we rarely build the exact same product twice...  It doesnt sound like there is anyway to easily maintain efficiency at the work center level.  We also build products in lot sizes of one due to quality requirements.

[RahulHanda · Accepted solution]

This is what you can try in such case: we have processing formula in work center which calculates the total time required. Example - machine time per piece * operation quantity / base quantity. So if it takes 2days and operation qty is 10 and base qty is 1 I need 20days for 10 qty.

You can create your own in customizing by multiplying that factor that means: 2 * machine time per piece * operation quantity / base quantity

This would mean 40days for above 10qty.

You will have to test this in your quality environment. Thereafter you can assign this formula to work center where required.

Regards

Rahul

[kenneth_snyder · Accepted solution]

Technically for planning purposes there is no difference.  You are basically just reducing the available number of hours that can be utilized to produce products.  So just use utilization rate to include the actual utilization and efficiency. 

[Former Member · Accepted solution]

I see. Thanks for taking the time to respond. 

[Former Member · Accepted solution]

I'll look at this option but it doesnt sound like it will work for our business model.  Thanks for taking the time to respond.